- Understanding Safe Harbor 401(k) Rules for Matching
The safe harbor 401(k) is a retirement savings plan that satisfies IRS non-discrimination tests while promoting equitable employer matching contributions. As an employer, you may opt for a safe harbor plan to simplify administration, ensure compliance with nondiscrimination testing requirements, and provide employees with predictable retirement benefits. As an employee, you may want to contribute… read more…
- How to Avoid the Early Withdrawal Penalty on Your 401(k)
The IRS has strict rules regarding when you can withdraw money from a tax-deferred retirement account like a 401(k). Doing so before age 59 ½ can trigger an early withdrawal penalty on top of income taxes. However, the IRS has designated specific situations in which a 401(k) account owner can qualify for penalty-free early withdrawals,… read more…
- I’m 55 With $1.2 Million in My 401(k). Would Catch-Up Contributions Be Worth It?
Catch-up contributions are designed to help people save extra money in tax-advantaged retirement accounts once they hit age 50. For many savers who are behind on their retirement savings goals, catch-up contributions represent a not-to-be-missed second chance at securing a more comfortable retirement. A financial advisor can help you plan and save for retirement. Connect… read more…
- I’m Getting Divorced This Year at 55 With $800k in a 401(k). How Do I Protect My Finances?
Like all family and property law, divorce is a highly state-specific process. How you will handle a divorce and protect your assets, and what constitutes individual vs. shared assets, will depend entirely on your jurisdiction. As a result, how retirement accounts are treated during divorce proceeds can vary widely from state to state. If you… read more…
- I Have a 401(k) From a Previous Employer. What Should I Do With It?
If you’ve changed jobs recently, don’t put off deciding what to do with your 401(k) for too long. While you have several options for your account when you leave a job, there’s an estimated 29.2 million 401(k)s that have been left behind with former employers, according to a 2023 analysis from Capitalize. Those accounts hold… read more…
- I’m 66, Taking Social Security, and Have $745,000 in a 401(k). Is It Too Late to Convert to a Roth IRA?
Legally, it’s never too late to make a Roth conversion. The IRS will let you move qualifying funds at any time as long as you can pay the resulting tax bill. For those in or near retirement, the bigger question is whether it’s a wise call to make a Roth conversion. On the one hand,… read more…
- How 401(k) Loans Impact Your Taxes
While borrowing from your 401(k) account can hurt your long-term retirement planning, that’s not the only consideration. There are also tax implications if you’re not able to repay the funds in a timely manner. Here’s what you need to know before taking out a 401(k) loan, and how it could impact your retirement nest egg.… read more…
- We’re in Our Late 50s With $1.6 Million in Our 401(k)s. Should We Switch to Roth Contributions?
A Roth IRA offers significant benefits for retirees. As an after-tax account, distributions from Roth IRAs are typically tax-free. This can save you a lot of money in retirement, but at the cost of up-front tax payments while you’re saving. You will spend more to build your portfolio today, but will save money later. A… read more…
- We Are 65 With $1.9 Million in a 401(k) and IRA, and $5,200 Monthly From Social Security. What’s Our Retirement Budget?
To really build a complete retirement budget as a couple, you’ll need to take into account both potential income sources and realistic expenses. While it’s possible to come up with an estimated income or range of incomes from these figures, the expense side of the budget is equally important and potentially much more variable. Other… read more…
- We’re 62 and Have $1.6 Million in Our 401(k)s. Should We Pivot to Roth Contributions?
By your early 60s, you’ll likely be paying close attention to your finances and retirement savings. This may include making crucial decisions on investment structure, risk tolerance, income needs and tax planning, among the many other moving parts of your financial life. A financial advisor can help you plan and save for retirement. Find a… read more…
- 401(k) Rollover vs. IRA Rollover
When you change employers, you may be required to roll over your 401(k) funds from that employer to another retirement account to avoid any tax penalties. The two most popular rollover options are to roll your funds into a new 401(k) or an individual retirement account (IRA). While you might be restricted based on your… read more…
- I’m 59 With $1.3 Million in a 401(k). How Do I Make Sure This Money Lasts the Rest of My Life?
Managing your money properly in retirement is critical for ensuring that it lasts as long as you do. For example, imagine you have $1.3 million in a 401(k) before age 60. While this is a considerable amount, a 4% withdrawal rate would only generate $52,000 per year. You’d also run the risk of running out… read more…
- We’re 60 and Have $2.5 Million in Our 401(k)s. Should We Pivot to Roth Contributions?
For the right person, a Roth IRA can be a fantastic retirement savings vehicle over the long term. So much so that it might seem to some that it’s always the right choice, no matter what. After all, tax-free income does sound pretty great. However, like anything in your retirement planning journey, this decision on pre- vs.… read more…
- I Want to Convert $500k in My 401(k) to a Roth IRA. How Do I Avoid Paying Taxes?
You can’t avoid taxes when converting to a Roth IRA, but certain strategies can help reduce the impact. Converting funds from a pre-tax account like a 401(k) or a traditional IRA to a Roth IRA means paying income tax on the amount transferred. The benefit is that future withdrawals are tax-free, which can be valuable… read more…
- What Should I Do With My 401(k) Once I Retire?
Managing your 401(k) in retirement every bit as important as managing it up to that point. There are plenty of reasons for this but the big one is, you’re going to need this money for a long time. With good health and good luck, you could spend almost as much time in retirement as you… read more…
- Contribution Limits for a One-Participant 401(k)
A one-participant 401(k) or solo 401(k) is an attractive retirement savings option for self-employed workers or business owners. While they’re similar to the standard 401(k) plans often offered at larger workplaces, one-participant 401(k)s allow solo business owners to exceed the contribution limits that other plans are subject to. Consider speaking with a financial advisor if… read more…
- How to Open a 401(k) for Yourself Without an Employer
Starting a 401(k) on your own typically means opening a plan designed for self-employed individuals or business owners with no employees. Options like a solo 401(k) allow you to contribute both as the employer and the employee, which can lead to higher annual contribution limits than many other retirement accounts. Setting one up involves choosing… read more…
- What Is a Safe Harbor 401(k) Plan and When Should You Invest?
The Safe Harbor 401(k) is a type of retirement plan designed to provide employers with a simple way to bypass annual nondiscrimination testing. This testing is a complex process that ensures contributions to retirement plans do not heavily favor highly compensated employees. It’s also required by traditional 401(k) plans. Understanding the Safe Harbor 401(k) plan,… read more…
- I Have $1 Million in a 401(k) and Will Receive $2,500 Monthly From Social Security. Can I Retire at 65?
Do you have enough money to retire? There are many different ways to look at this, but the most common is to break it down simply: money in vs. money out. How much income can you generate from your retirement planning, and how much will you need to spend? Here, say that you have $1… read more…
- Does Your 401(k) Need to Be Protected?
When choosing among the mutual funds, target-date funds and other investments offered in a 401(k) plan, nobody sets out to select a costly investment that could affect their future. But, according to law professors Ian Ayres of Yale University and Quinn Curtis of the University of Virginia, that’s often exactly what can happen. Taking personalized… read more…
- How to Calculate 401(k) Cash Out Penalties
A 401(k) is a retirement savings plan offered by your employer that lets you set aside part of your paycheck before taxes. It’s a great way to build long-term savings and enjoy tax benefits. However, withdrawing money early—before age 59½—can come with hefty penalties. So, what happens if you need to access your funds sooner?… read more…
- When Is a Good Time to Roll Over Your 401(k)?
An optimal time to roll over your 401(k) really depends on your individual financial circumstances, retirement goals and the specific options that are available to you. Here’s what you need to consider to determine the right time for a 401(k) rollover. A financial advisor can help you decide if and when you should roll over… read more…
- Rolling Over a 401(k) When the Market Is Down: Should You Do It?
Deciding how to manage your 401(k) in a volatile market can be unnerving. The stakes are high – your retirement is on the line. So learning how to navigate deftly is essential, especially when examining crucial decisions like rolling over your 401(k). But, should you do it? Here’s what you need to know. A financial… read more…
- How to Move Your 401(k) to Gold Without a Penalty
Moving a 401(k) to a gold IRA, as a rollover, can be a strategic way to diversify your retirement savings, yet it’s a procedure that requires careful navigation. This is something that might benefit you if you want to do something different with the money in your 401(k), but investing in gold has its own… read more…
- 401(k) Contribution Limits Projected to Rise Again in 2024: How to Plan Ahead
401(k) contribution limits should continue their upward climb in 2024, according to a recent projection by Mercer. However, easing inflation now means lower forecasts for 401(k) and other retirement plan contribution limits for next year. After rising substantially from $20,500 in 2022 to $22,500 for 2023, Mercer projects the annual cap to go up just… read more…